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Getting To $50 Million With A Single Store

Furniture World Magazine


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It might be as simple as changing your media mix.

In late afternoon in the middle of March, Clive Lubner asked a simple question. "How can we get $50 million out of this (Scottsdale) store?" The answer would not be simplistic or easy for many to understand. But the answer lay in statistical data that is available to home furnishings retailers everywhere.

Yes, there was the positive economic environment to consider in making plans to increase sales to the $50 million level. But still, this would have to be an enormous gain, in a very short period.

ECONOMIC DATA
In 1998, the home furnishings industry was a $45 billion industry. It is expected to grow to $60 billion by the year 2000.

American personal consumption gained strength in the fourth quarter of 1998. Recent gains in wages, salaries and other income as well as good employment prospects and the resurgent stock market have provided the background increases in consumer confidence. Spending on big ticket durable goods during this period was particularly good: retail sales climbed 6%-7% above 1997 levels (AFMA, September, 1998; Survey of Current Business).

The overall outlook for the home furnishings industry continues to be positive, especially in Nevada, Utah, Florida, Alaska and Arizona (an increase from 31% to 38%). Overall, household furniture spending is projected to increase 19% for 1999.

SHOPPING PATTERNS
The data points to the fact that retailers are missing key opportunities especially with younger consumers and are ignoring important consumer trends. It has been reported that the younger market buys furniture more often than their elders but are less satisfied with their store experience. They are also less likely to return -- according to a new survey by ADVO, Inc. The ADVO survey found that 63% of consumers between 18-34 buy furniture every 3 years or less compared to 53% for those aged 35-54, and only 33% of consumers aged 55 and over. At the same time, only 67% of consumers 18-34 were satisfied with the sales person who sold them their furniture, compared to 80% of consumers aged 35 and over. And only 62% of 18-34 year olds plan to return to the store where they made the purchase compared with 75% in the 35 and over age group.

The study also shows that younger consumers are a highly active group whose needs are being overlooked by many furniture retailers. These consumers are more likely to be repeat furniture buyers and have a high lifetime customer value. Thus, they should be a key target market. Yet most furniture retailers are not doing enough to satisfy and retain younger customers.

In the survey done for ADVO by NPD Group, it was discovered that younger consumers are more price sensitive than their older counterparts. In the 18-34 age group, 58% cited best price as a factor in selecting a store versus only 45% of the 55+ age group. Among these younger consumers, 47% listed low price as a primary reason for making a purchase, compared to 31% in the 35-54 age group and only 20% of the 55 and older.

Additional findings: the average time spent shopping for furniture was 5.5 weeks. The average length of time between purchases was 4 years. 64% of consumers have no idea what brand of furniture they want and 42% have no idea what model they want when they start searching. The average consumer shops at 3.4 stores before making a furniture purchase. The top way consumers said they knew about the store where they made a purchase was that they had made a purchase there previously (57%) followed by "they had known about the store for sometime (53%)".
55% of customers compared advertising prices to determine where they shopped for furniture. 84% of customers visited the store in which they made their purchase at least two times and 11% of consumers visited 5 times. The top four reasons consumers selected the store in which they had made their final purchase were because:

  • The store had the item I wanted (74%).
  • The store offered the best perceived prices.
  • Generally the store had good prices (46%).
  • The store had a large selection (46%).

Finally, there was the most informative part of the survey. It stated that in general, furniture advertising has changed.

DECISION 100% TELEVISION
Clive then asked, "What month would you like to try that strategy in?" Never flinching, the response was, "Let's make the test in the worst month possible within this fiscal year. April." Based on advice from his marketing communications firm, he decided to use 100% television in the month of April 1999 in the Phoenix DMA (Designated Marketing Area).

Retail television advertising messages have tended to become more informative and less obnoxious over the past 10 years. This has created a higher level of response that can be directly measured in retail traffic. Moreover, advertising is down in newspapers.

Our experience has shown that television has become more effective with all consumers; not just younger consumers. An important point about younger consumers is that home furnishings retailers tend to omit them from their advertising strategy. They are not the biggest or richest demographic group in the market for home furnishings, but they can be significant if they have interest, and retailers get in front of them with the right message. All people have both long term buying power and short term buying power if we pay attention to them. And this group watches television selected television such as Ali McBeal more than most groups. This is not to suggest that this was the only reason for expanding the target audience... or to narrow in on one small segment. The expanded use of television has allowed Robb & Stucky to succeed where others have not.

Television, used in the 100% mode, raises the level of "share of ear" that newspapers cannot ever achieve. The customers already knew about Robb & Stucky. Their normal budgets consist of 65% television and their reputation for quality and value is unsurpassed within their various markets. They reinforced this knowledge with much heavier repetition than newspaper could ever achieve within budget. Surely it was a reminder. But it was also an informer. The customer had to be excited to get them to act. Television commercials were created that appealed to the younger audience. These were placed where they could view them. Television commercials were created that would appeal to the boomers and were placed where they could view them. Television commercials were carefully designed to reach the more mature audience and these were placed where they could view them.

RESULTS
But what about the results? What happened when 100% of the ad budget was placed on television during the course of one month?

Robb & Stucky experienced greatest single-store monthly sales figures in the history of their firm. They had selling days in excess of $100,000 every day of that month. They also generated the largest single sales day in the history of any one store in their elite chain of quality stores. More than 8,000 potential customers visited Robb & Stucky during the month of April. Robb & Stucky's sales grew in excess of 24% for the month. Robb & Stucky's traffic was up substantially. Robb & Stucky's market share continued to grow to a leading position within the entire marketplace. And, they have only been in the marketplace for five years.

They sold home furnishings without using "SALE" as a gimmick. They sold home furnishings without any print no newspaper no direct mail no magazine advertising. They sold it with 100% television. They placed their modified commercials directly against a younger audience, with such shows as "Ali McBeal". They sponsored "Biography" on A&E. They were everywhere on cable.
They took up the challenge and grew the furniture category like no other store in the world has done. And they used 100% television. Use television. It works!
And remember, "nobody reads the newspaper anymore".

Note: While basic networks have lost audience during the past several years, cable has grown rapidly. And, to be fair, FOX and WB have also gained in audience. To receive a free book of Cable TV Facts 1999 contact Lance Benefield & Co., Inc. WORLDWIDE for your copy. To order, go to their website at www.lancebenefield.com. It will be provided to you for a nominal shipping and handling charge.)


Lance G. Hanish is the President of Lance Benefield & Co., Inc. Worldwide, a leading marketing communications firm serving home furnishings retailers. Questions on any aspect of television media management or production can be direct to Mr. Hanish care of FURNITURE WORLD Magazine at lhanish@furninfo.com.

 

Furniture World is the oldest, continuously published trade publication in the United States. It is published for the benefit of furniture retail executives. Print circulation of 20,000 is directed primarily to furniture retailers in the US and Canada.  In 1970, the magazine established and endowed the Bernice Bienenstock Furniture Library (www.furniturelibrary.com) in High Point, NC, now a public foundation containing more than 5,000 books on furniture and design dating from 1620. For more information contact editor@furninfo.com.